In: Economics
Identify at least two Naming Rights Issues. Explain. (Your answer should be a minimum of 2 well-reasoned paragraphs. 10 Points)
Answer:
A naming right is a form of financial transaction and advertising by which a corporation or other organization buys the right to name a facility or event, especially for a specific period of time. For properties such as multipurpose arenas, performing arts planes or athletic fields, the term ranges from three to 20 years. Long terms are more common for high profile venues such as professional sports facilities.
Issues in Naming Rights Deals
Corporations usually merge and name changes are common. The Arizona Diamondback Ballpark is an example where the stadium was renamed after a corporate merger. In 2005, Bank One merged with JPMorgan Chess to become Bank One Ballpark Chess Field. San Francisco Giants Home Park Names Address How to Address Future Name Changes in the Agreement There is a proper case study for this. SBC, originally known as Pack Bell Park, acquired PC Bell and renamed the park SBC Park. SBC then acquired AT&T, renaming the attendant at AT&T Park.
In the sale or merger of the naming company or if the existing name of the company is changed, certain nomination agreements in that name allow for the name of the new stadium. Often the agreement requires prior written approval from the team and / or site operator, with such consent not to be unreasonably blocked or stipulated. The naming parties ignore the possibility of a merger, acquisition or rebranding of the company. Naming rights deals usually last twenty-five years. The nomination agreement should anticipate this issue and address it efficiently.
The name claim involves more than just bringing a company's name into the arena. For example, the Veterans House at AT&T Park uses AT&T WiFi in its intricate extension. The naming rights agreement is usually a marriage between two different business areas. Visibility of the sponsoring company is the primary objective of the agreements. Contracting highlights the effectiveness of agreements such as increasing service utilization, product placement planning, and raising business awareness of sponsoring companies.
Naming companies use their in-house trademarks to identify locations for the purpose of naming rights agreements. Trademarks are complex pieces of intellectual property. The use of the naming company's trademark space causes various problems; Chief among them is what is the trademark right of the naming company. Most nomination agreements include a trademark license on the naming company's location. Although some of the terms are quite straightforward - the naming rights agreement license will almost certainly be unique - most parts of the license are complex and interrelated, requiring a comprehensive assessment. An important point to pay attention to is the quality control responsibilities imposed on the premises.
On the opposite end of the spectrum, building a good relationship can be mutually beneficial. Take Shark and SAP for example. The sharks will occupy the building currently known as the SAP Center between 2026 and 2040. The naming rights agreement of SAP is for a relatively short period of five years from 2013 to 2018. San Jose and Shark City's agreement with SAP allows SAP to extend the contract for an additional five years, including the right to first negotiate. As with other options in the future, predicting how the market will look in a few years will give a lot of room for errors. The one-sided option to expand is the result of the nomination party’s advantage and allows the market to re-evaluate when its option comes at the right time. Maintaining flexibility for oneself is usually the last game to increase the value of the contract and the value of future nominal rights.
Similar to the name change, many contracts predict that the naming company will eventually withdraw from the business relationship. The assignability of the Nomination Rights Agreement may be allowed, but the most likely scenario is an early termination negotiation. A situation arose when HP ignored the cost cut and demanded an early withdrawal from the HP Pavilion Nomination Rights Agreement. The Sharks and City of San Jose finally found an SAP that assumed the remaining years of HP's contract and extended the terms of the HP contract for another four years for a total of five years.
Note: As you asked for two issues so you can pick any two of these. Kindly do upvote if you found this anwer helpful thank you)